Coca Cola FEMSA (NYSE:KOF) versus Compania Cervecerias Unidas (NYSE:CCU) Critical Analysis

Coca Cola FEMSA (NYSE:KOF) and Compania Cervecerias Unidas (NYSE:CCU) are both consumer staples companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.

Insider & Institutional Ownership

24.1% of Compania Cervecerias Unidas shares are owned by institutional investors. 1.0% of Coca Cola FEMSA shares are owned by insiders. Comparatively, 8.4% of Compania Cervecerias Unidas shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Coca Cola FEMSA and Compania Cervecerias Unidas, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Coca Cola FEMSA	0	5	4	0	2.44
Compania Cervecerias Unidas	3	1	0	0	1.25

Coca Cola FEMSA currently has a consensus price target of $121.83, indicating a potential upside of 5.45%. Compania Cervecerias Unidas has a consensus price target of $11.50, indicating a potential upside of 11.33%. Given Compania Cervecerias Unidas’ higher probable upside, analysts clearly believe Compania Cervecerias Unidas is more favorable than Coca Cola FEMSA.

Earnings & Valuation

This table compares Coca Cola FEMSA and Compania Cervecerias Unidas”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Coca Cola FEMSA	$15.22 billion	12.76	$1.32 billion	$6.55	17.64
Compania Cervecerias Unidas	$3.06 billion	0.62	$128.87 million	$0.62	16.66

Coca Cola FEMSA has higher revenue and earnings than Compania Cervecerias Unidas. Compania Cervecerias Unidas is trading at a lower price-to-earnings ratio than Coca Cola FEMSA, indicating that it is currently the more affordable of the two stocks.

Dividends

Coca Cola FEMSA pays an annual dividend of $3.76 per share and has a dividend yield of 3.3%. Compania Cervecerias Unidas pays an annual dividend of $0.19 per share and has a dividend yield of 1.8%. Coca Cola FEMSA pays out 57.4% of its earnings in the form of a dividend. Compania Cervecerias Unidas pays out 30.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Volatility & Risk

Coca Cola FEMSA has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, Compania Cervecerias Unidas has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500.

Profitability

This table compares Coca Cola FEMSA and Compania Cervecerias Unidas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Coca Cola FEMSA	7.95%	15.76%	7.27%
Compania Cervecerias Unidas	3.71%	6.77%	3.06%

Summary

Coca Cola FEMSA beats Compania Cervecerias Unidas on 12 of the 16 factors compared between the two stocks.

About Coca Cola FEMSA

Coca-Cola FEMSA, S.A.B. de C.V., a franchise bottler, produces, markets, sells, and distributes Coca-Cola trademark beverages in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Brazil, Argentina, and Uruguay. The company offers sparkling beverages, including colas and flavored sparkling beverages; waters; other non-carbonated beverages comprising juice drinks, coffee, teas, milk, value-added dairy products, sports and energy drinks, and plant-based drinks; and alcoholic beverages, such as hard seltzer under the Topo Chico brand name. It also distributes and sells Heineken, Estrella Galicia, Therezópolis, and Campari beer products, as well as Perfetti confectionary and chewing gum in its Brazilian territories; and Monster products. The company sells its products to distributors, retail outlets, wholesale supermarkets, discount and convenience stores, retailers, points-of-sale outlets, restaurants, bars, stadiums, auditoriums, theaters, and home deliveries. Coca-Cola FEMSA, S.A.B. de C.V. was founded in 1979 and is headquartered in Mexico City, Mexico.

About Compania Cervecerias Unidas

Compañía Cervecerías Unidas S.A. operates as a beverage company in Chile, Argentina, Bolivia, Colombia, Paraguay, and Uruguay. The company operates through three segments: Chile, International Business, and Wine. It produces and sells alcoholic and non-alcoholic beer under proprietary and licensed brands, as well as distributes Pernod Ricard products in non-supermarket retail stores. The company also produces and sells non-alcoholic beverages, including carbonated soft drinks, nectars and juices, sports and energy drinks, and ice tea; and mineral, purified, and flavored bottled water, as well as ready-to-mix products with instant powder drinks. In addition, it is involved in the production and distribution of pisco, cocktails, rum, flavored alcoholic beverages, gin, and cider. The company serves small and medium-sized retail outlets; retail establishments, such as restaurants, hotels, and bars; wholesalers; and supermarket chains. It also exports its products to Europe, Latin America, the United States, Canada, Asia, Oceania, and internationally. The company was founded in 1850 and is based in Santiago, Chile. Compañía Cervecerías Unidas S.A. is a subsidiary of Inversiones y Rentas S.A.